US Federal Reserve raises fears of global economic slowdown

Stock Markets

Australian shares are poised to edge lower today after US stocks were dragged lower overnight on concerns over the US Federal Reserve flagging a weaker US economy amid lingering worries about US/China trade talks. The Federal Reserve took a more dovish stance than expected, signalling that it will not hike interest rates this year in the face of a slowing economy, no longer anticipating the need to guard against inflation with restrictive monetary policy. The central bank also announced a plan to end its balance sheet reduction program by September.

Wall Street's major indexes ended the session mixed after the Federal Reserve decided to leave interest rates unchanged and downgraded its expected rate path to signal that no future rate hikes are likely in 2019 with only one rate hike expected for 2020. US shares rebounded into positive territory upon the release of the Federal Reserves' latest policy statement, before paring gains closing in negative territory as concerns about a slowing US economy and uncertainty regarding the trade talks shifted investor sentiment. The Dow Jones and S&P 500 closed in negative territory, with the indexes losing 141.71 (-0.55%) points and 8.34 (-0.29%) respectively. Conversely, the NASDAQ 100 posted marginal gains, with the index gaining 5.02 (+0.07%) points.

The benchmark S&P/ASX200 index closed down 19.5 (-0.32%) points on Wednesday after a drop in iron ore prices put pressure on the mining sector, with the sector collectively down 1.36%.

ASX 200 futures are currently down 4 points. 

Today's data releases: AUS February Employment Change and Unemployment Rate, NZ fourth quarter GDP, Euro zone consumer confidence, UK retail sales February

Commodities and Currencies

Brent and WTI crude posted modest gains overnight and are currently sitting at US$68.26 (+1.18%) and US$59.99 (+0.96%) respectively.

Iron ore prices are currently down 3.4% at US$84.30 per tonne. News reporting that miner Vale SA had been given permission to restart production on a shuttered iron ore mine in Brazil caused future prices in the commodity to drop 5%.  

The spot price of gold is currently up 0.39% at US$1311.70.

The AUD is currently marginally up 0.03% at US71.18¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3633.